Strong pound subdues manufacturing exports, the CBI says

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The strong pound is weighing on the manufacturing sector (Source: Getty)

The strong sterling and continued uncertainty for the Eurozone are subduing Britain's manufacturing sector.

The CBI said that export orders had fallen to their lowest in more than two years. Just 10 per cent of businesses reported total order books that were above normal for this time of the year. while 35 per cent said they were below normal.

"Sluggish export performance seems to be a headache that won't go away, with a still subdued Eurozone and headwinds from a stronger pound," Rain Newton-Smith, CBI's director of economics, said.

"But measures in the Budget to support exporters should be a welcome boost for the sector’s longer-term prospects."

"With emerging markets facing a tough time and uncertainty continuing to hang over the Eurozone, firms are having to work even harder for opportunities to sell their products and services around the world."

The pound rose around seven per cent ahead of the euro in mid-March, thanks to a better economic outlook for the UK, as well as the European Central Bank's €1.1 trillion (£800bn) debt-buying programme.

A strong currency is typically a headache for exporters because it makes their goods more expensive, and thus less competitive.

"This indicates that recent signs of improving Eurozone growth is yet to feed through to help UK manufacturing exporters, while the strength of the pound against the euro may well be significantly hampering sales to the Eurozone," Howard Archer, chief UK and European economist, said.